TSX-listed Mawson West has decided to place the Dikulushi mine in the Democratic Republic of Congo (DRC) on care and maintenance, a move which has upset investors and resulted in a 42.86% decline of its shares to $0.02 per share.
Currently there are 214.3 million outstanding shares with a market cap of $4.3 million. Mawson West will hold an extraordinary general meeting of shareholders in Perth, Western Australia in February.
Dikulushi mine goes on care and maintenance
The announcement follows the successful completion of the initial components of the company’s US$33.4 million financing package with Galena Private Equity Resources Fund LP, in which Mawson West has concluded a review of its Dikulushi and Kapulo operations in the DRC.
“Commodity price deterioration, combined with lower than expected copper and silver production at Dikulushi has driven this decision. A detailed mining study has commenced to determine the appropriate mining strategy, economics and structure to assess future operation opportunities,” the company said in a statement.
During 2014, the Dikulushi mine produced approximately 3 000 tonnes of copper in concentrate – well below original expectations. Performance at Dikulushi has continued to be affected by mining dilution resulting in lower than expected mined ore grades.
Maswon West has decided to place the Dikulushi mine on care and maintenance in consultation with Galena and Trafigura Pte, lenders to the company. However, the placement of the Dikulushi mine on care and maintenance is not expected to affect the previously announced financing and debt restructuring package.
Corporate restructuring and job losses on the cards
In addition to the decision to place the Dikulushi mine on care and maintenance, the board of directors has also decided to reduce the number of people currently working at the Kapulo project. “As part of a wider corporate review, the company is also considering its corporate structure and associated costs,” Mawson West added.